What Black Monday tells us about the latest sell-off

A good historical precedent for current market conditions is the huge one-day drop that occurred on October 19, 1987

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By

Barry Eichengreen

February 15, 2018 Updated: 10:12 a.m. GMT

US President Donald Trump has regularly pointed to the stock market as a source of validation of his administration’s economic programme. But, while the Dow Jones Industrial Average (DJIA) has risen by roughly 30% since Trump’s inauguration, the extent to which the market’s rise was due to the president’s policies is uncertain. What is certain, as we have recently been reminded, is that what goes up can come down.

When interpreting sharp drops in stock prices and their impact, many will think back to 2008 and the market turbulence...